HELENA General fund revenues for Montana through the end of December are up 18 percent over the same time in 2017, according to an update released Wednesday by the Legislative Fiscal Division.

Nearly $180 million was collected, the division noted and cited several factors for the increase that included legislatively authorized transfers of $63 million, strong growth in individual income tax, property tax collections and corporation income tax audit activity.
Department officials projected a potential shortfall of $52 million, using a cash concept model.

The report was prepared for the Legislature’s Revenue and Transportation Interim Committee, the House and Senate Tax, House Appropriations and Senate Finance and Claims members. The report was first of what is expected to be six updates to keep the Legislature apprised of collections.

The Legislature met in special session in November to fill a $227 million budget gap caused by declining revenues and an expensive fire season.

“Revenue has perked up compared to a year ago,” said Sen. Fred Thomas, R-Stevensville. “I figured it would happen but you don’t know until you know.”

Dan Villa, the governor’s budget director, said some taxpayers prepaid in order to get the most beneficial treatment under state and federal law.

“We will need to work out how much of the December and following month increases were growth and how much was a one-time-only bump from taxpayer behavior changes,” he stated in an email.

Villa said dramatic audit revenue increases are one-time.

“… we also anticipate there will be a significant refund against this audit this fiscal year,” Villa stated.

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State Budget Director Dan Villa(Photo: Tribune photo/Phil Drake)

The report noted that individual income tax was at $57 million or up 8.8 percent. The update said the collection was below the 13.1 percent projected. Property tax was at $40.5 million or 53.7 percent higher from last year at this time.

"Property taxes are higher than anticipated," Thomas said. "That's good for state revenue but not good for taxpayers."

Corporation tax collections were up 36 percent and vehicle taxes and fees were down 4.8 percent. Officials note those payments may increase in January.

The Montana Department of Revenue recently predicts the state could face a $46 million hole in its budget under an initial reading of the changes to the tax code approved by Congress last month. That prompted some speculation of another special session.

Thomas said Wednesday he doubted it would happen, especially in light of the latest revenue report.

"I think it was dead before anyway, prior to this," he said.

The Budget Office, Department of Revenue and Governor's Office are still evaluating the federal tax bill and its impact on the state budget.